Park Place Entertainment Doubles Fourth Quarter Earnings
LAS VEGAS--(BUSINESS WIRE)--Feb. 1, 2000--Park Place Entertainment Corp. (NYSE:PPE - news) today reported results for the fourth quarter and full year 1999.
Capping an outstanding first year as an independent company, Park Place's diluted earnings per share for the quarter were $0.11 vs. pro forma results of $0.05 last year, excluding one-time, non-cash asset write-downs in 1999 and 1998. Including these non-recurring charges in both periods, diluted earnings per share in the fourth quarter of 1999 were $0.05 vs. $0.02 in 1998.
The company initiated reporting cash earnings (net income before goodwill amortization associated with its acquisitions) as it believes the cash earnings measure provides additional insight into Park Place's earnings potential. Cash earnings per share increased 75 percent in the fourth quarter to $0.14 vs. $0.08, excluding the non-recurring charges.
Earnings before interest, taxes, depreciation and amortization, pre-opening expenses and non-cash items (EBITDA) increased 39 percent to $193 million compared with the pro forma fourth quarter 1998 results of $139 million.
EBITDA increased in all three domestic regions primarily due to the successful opening of the Paris Las Vegas Casino Resort in September, the new rooms opened earlier in the year in Mississippi, the continued success of various domestic and international marketing efforts and the ongoing implementation of cost saving programs at the property and corporate level.
Highlights from 1999 include:
-- Establishing Park Place as a stand-alone company.
Acquiring and integrating Grand Casinos, immediately making Park Place the leading operator in Mississippi.
Opening the 600-room Terrace Hotel & Spa at Grand Tunica in March and the 600-room Oasis Resort and Spa at Grand Gulfport in June.
Raising $3 billion in bank financing (the largest ever in the gaming industry) to close the Caesars acquisition.
Opening the fully operational Paris Las Vegas Casino Resort on Sept. 1. Based on results since opening, Park Place believes Paris may earn the highest return on investment of all the gaming properties built in 1998 and 1999 in Las Vegas.
Closing the $3 billion Caesars World acquisition on Dec. 29, enhancing Park Place's leadership position in the industry. The acquisition enhances the company's diversification and portfolio of leading assets, as well as giving it access to one of the most internationally recognized names in the gaming business.
Increasing full year diluted earnings per share by 22 percent, excluding non-recurring charges, and EBITDA by 14 percent through same-store revenue growth, as well as new development.
``We are very proud of our accomplishments in our first year and look forward to continuing the momentum in 2000,' said Arthur Goldberg, president and CEO. ``We are working towards integrating Caesars and implementing processes and procedures that improve the product we deliver to our customers while simultaneously optimizing operating efficiency.'
Eastern Region
EBITDA for the Eastern Region increased 33 percent from $33 million in 1998 to $44 million in the fourth quarter of 1999.
EBITDA at Bally's Park Place was up $7 million for the quarter due to a 14 percent increase in table game drop and an 11 percent increase in slot handle. At the Atlantic City Hilton, a 27 percent increase in slot handle and a 9 percent increase in table game drop generated a 67 percent increase in EBITDA from $6 million to $10 million in the fourth quarter of 1999.
Gaming volume increases at both properties were driven by the maturation of marketing programs put into place at the beginning of the year at both the property and corporate level, driving incremental visitation and play.
Mid-South Region
EBITDA at Grand Gulfport came in at $11 million for the fourth quarter, a 22 percent increase over last year. New rooms added in June generated incremental visitation and increased gaming volumes. Grand Biloxi reported a 12 percent decrease in EBITDA due to the continued competitive pressure from significant new supply added in Biloxi in the first quarter.
A 9 percent increase in EBITDA to $12 million in the fourth quarter at Grand Tunica was due to the new rooms added in March which drove incremental play.
Other Mid-South operations posted EBITDA of $7 million compared with last year's $12 million primarily as a result of new supply added in the region in the fourth quarter.
Regional overhead decreased from $7 million to $2 million from ongoing cost reduction programs.
On Dec. 23, the company opened its 52,000-square-foot casino expansion at Grand Casino Biloxi. The new facility adds 25,000 feet of gaming space, 480 slots, 11 table games and a 280-seat seafood buffet restaurant. It expands the popular Mississippi Long Bar Casino and is expected to drive incremental visitation and play.
Western Region
EBITDA for the Western Region increased by $43 million or 67 percent for the fourth quarter primarily due to the introduction of Paris Las Vegas in September and a $4 million EBITDA increase at the Las Vegas Hilton.
Paris Las Vegas combined with Bally's Las Vegas generated $54 million in EBITDA for the fourth quarter of 1999 compared with the $17 million Bally's posted on its own in 1998. Room revenues at Paris exceeded budget as the property's price/value relationship and location continued to drive demand.
At the Las Vegas Hilton, a 44 percent EBITDA increase in the fourth quarter to $13 million resulted from cost containment programs and increased slot and sports book revenues, while EBITDA at the Flamingo Hilton Las Vegas was $28 million vs. $29 million last year.
Other Western Region EBITDA in the fourth quarter rose 33 percent as room revenues and gaming win was up at both the Reno Hilton and the Flamingo Hilton Laughlin due to the successful implementation of marketing programs designed to increase visitation and play.
On Nov. 13, Park Place Entertainment co-hosted the Holyfield vs. Lewis rematch at the Thomas & Mack Center in Las Vegas that determined the heavyweight boxing champion of the world. The event drove incremental play into the company's Las Vegas properties and benefited certain other Park Place properties across the country through pay-per-view rights to televise the fight in its properties.
International
Fourth quarter 1999 results for the International Region were $9 million compared with last year's $10 million as increases in both Australian properties were offset by continued softness in Uruguay.
Full Year Results
EBITDA for the 12 months ended Dec. 31, 1999, totaled $778 million, a 14 percent increase over last year's $683 million, pro forma for the acquisition of Grand Casinos.
Net income for the 12-month period was $186 million, or $0.60 per diluted share, up 22 percent from the pro forma results of $0.49 per diluted share reported for the 12 months ended Dec. 31, 1998. The 1999 results exclude $50 million, net of tax, or $0.16 per diluted share of non-recurring, non-cash charges relating primarily to pre-opening expenses at Paris Las Vegas and the write down of the Flamingo Hilton Reno, and the 1998 results exclude $10 million, net of tax, or $0.04 per diluted share of non-recurring, non-cash charges relating primarily to the write down of assets.
Cash earnings per share for the year, excluding non-recurring charges, increased 18 percent to $0.71 compared with $0.60 last year.
Corporate Items
In December, the company repurchased an additional 1.4 million of its stock at an average price of $11.48. For the year, 3.1 million of the 8 million share authorization was utilized, leaving 4.9 million available for additional repurchases.
On Dec. 16, the company announced that it had entered into a definitive agreement to sell the Flamingo Hilton Reno for $20 million. The transaction is expected to close by June 30, 2000, subject to regulatory approval, and resulted in a $17 million non-cash, after-tax loss in the fourth quarter of 1999.
Acquiring Caesars in a purchase transaction on Dec. 29 resulted in the inclusion of two days of Caesars results in Park Place Entertainment's fourth quarter and year-end results. The net impact on both the quarter and the year was not material.
Park Place Entertainment is the world's largest gaming company and owns, manages or has an interest in 29 gaming properties operating under the Bally's, Caesars, Flamingo, Grand and Hilton brand names with a total of 2 million square feet of gaming space, over 28,000 hotel rooms and approximately 65,000 employees worldwide.
Additional information on Park Place Entertainment can be accessed through the company's 24-hour investor relations service. Individuals may call toll-free 877/PPE-NYSE (877/773-6973) or visit www.parkplace.com to obtain the latest company news and stock price information, or to request information by e-mail, fax or postal mail delivery.
Note: This news release contains ``forward-looking statements' within the meaning of federal securities law, including statements concerning anticipated asset sales, market growth and market and financial projections. The forward-looking statements in this news release are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those expressed in or implied by the statements herein. Additional information concerning potential factors that could affect the company's
future financial results is included in the company's Annual Report on Form 10-K for the year ended Dec. 31, 1998, and Forms 10-Q filed for the periods ending March 31, 1999, June 30, 1999 and Sept. 30, 1999.
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